Regulated Debit Issuers Look for Credit-Worthy Customers

by Mercator Advisory Group 0

As Regulation II (Durbin Amendment) pulled the revenue rug out from under many of the largest debit issuers nationwide, one of their responses has been to more actively target the affluent traveler, a trend Mercator Advisory Group identified from our earliest reporting on the rules’ impact on the larger market.

Travel rewards cards are perennial favorites with cardholders, and also offer accretive revenue such as annual fees and foreign transaction fees. The downside of the strategy is the finite pool of candidates, driving up the cost of acquisition as well as the general trend for consumers to pay off debt faster or apply for cards in order to get a quick flight, then throw them in a drawer.

The successful programs will be those that incent cardholders to use the cards for everyday spending. This has the adverse effect of making the issuer’s debit card portfolios less valuable overall, but with pricing set at commodity levels, it’s difficult to justify investments of any kind.

From Bank Credit News:

Some banks have also said that they hope to attract more affluent customers, who tend to utilize travel rewards programs more than other customers.

Click here to read more from Bank Credit News.

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